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Financial Leverage (Trading on Equity) Explained in One Minute

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The idea of borrowing money to buy more or better assets may sound tempting but financial leverage (also known as trading on equity) can be quite dangerous. Is financial leverage a good option? It definitely can be but it's certainly not for everyone. Please like, comment and subscribe if you've enjoyed the video. To support the channel, give me a minute (see what I did there?) of your time by visiting OneMinuteEconomics.com and reading my message. Bitcoin donations can be sent to 1AFYgM8Cmiiu5HjcXaP5aS1fEBJ5n3VDck and PayPal donations to [email protected], any and all support is greatly appreciated! Oh and I've also started playing around with Patreon, my link is: https://www.patreon.com/oneminuteeconomics Interested in reading a good book? My first book, Wealth Management 2.0 (through which I do my best to help people manage their wealth properly, whether we're talking about someone who has a huge amount of money at his disposal or someone who is still living paycheck to paycheck), can be bought using the links below: Amazon - https://www.amazon.com/Wealth-Management-2-0-Financial-Professionals-ebook/dp/B01I1WA2BK Barnes & Noble - http://www.barnesandnoble.com/w/wealth-management-20-andrei-polgar/1124435282?ean=2940153328942 iBooks (Apple) - https://itun.es/us/wYSveb.l Kobo - https://store.kobobooks.com/en-us/ebook/wealth-management-2-0 My second book, the Wall Street Journal and USA Today bestseller The Age of Anomaly (through which I help people prepare for financial calamities and become more financially resilient in general), can be bought using the links below. Amazon - https://www.amazon.com/Age-Anomaly-Spotting-Financial-Uncertainty-ebook/dp/B078SYL5YS Barnes & Noble - https://www.barnesandnoble.com/w/the-age-of-anomaly-andrei-polgar/1127084693?ean=2940155383970 iBooks (Apple) - https://itunes.apple.com/us/book/age-anomaly-spotting-financial-storms-in-sea-uncertainty/id1331704265 Kobo - https://www.kobo.com/ww/en/ebook/the-age-of-anomaly-spotting-financial-storms-in-a-sea-of-uncertainty Last but not least, if you'd like to follow me on social media, use one of the links below: https://www.facebook.com/oneminuteeconomics https://twitter.com/andreipolgar https://ro.linkedin.com/in/andrei-polgar-9a11a561
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Text Comments (15)
Nm Bsf (4 months ago)
5x isn’t 5 times more, that would be 6x.. you would rather say 4 times more.. how are you trying to teach economics this way?
Mel Cruz (1 month ago)
Nm Bsf annoying much 🤦‍♂️
Mister Gibson (5 months ago)
0:00-1:28 HUH?
وليد الراجحي (5 months ago)
Good explaining thank you keep going Waleed ALRajhi
Da BUTCHER (6 months ago)
That was the most complicated minute and 29 seconds of my entire life...😐
Kevin Whitsitt (10 months ago)
Very True. When I go to my job I"m my boss's leverage for him to get rich. Here are more thoughts on this topic. https://www.youtube.com/watch?v=8bJgOGgi2zs
Beginner Tuts (1 year ago)
which software do you use to make these animated videos?
Soundarya (1 year ago)
THis channel is AWESOME...wonder why u guys dont have a million views already....sharing this vid to poeple i know right away!! Keep going xD
One Minute Economics (1 year ago)
Thanks a LOT for your enthusiasm and support, welcome to the community :)
sharperguy (2 years ago)
You didn't mention the possibility that if the price drops too quickly, you may end up selling the shares below the margin call price, and still owe the broker money even after losing all your shares.
sharperguy (2 years ago)
Yeah usually you'll be charged a small percentage periodically while the trade is still open.
P. Dastaan (2 years ago)
Does broker charge you interest for leverage?
One Minute Economics (2 years ago)
Thanks a lot for contributing guys, I love the fact that we're starting to have more and more productive discussions, you're awesome!
Dracolith1 (2 years ago)
That depends on the terms of the loan. Ideally (for the borrower), you would get a No-recourse margin loan, and then any excess loss that could not be gotten selling the collateral would be the broker's loss. Most of the time you can't get a no-recourse loan, and then, you'll owe the broker the difference, and they can then take your cash and liquidate any other stocks you have with them; if you still cannot meet their margin requirement, then you'll be required to deposit more cash. Finally, if you fail, then they're another creditor you owe money PLUS penalties and a high interest-rate which will accrue, just like a mortage or car loan in default.....
snois2 (2 years ago)
So what happens if you don't pay back?

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